Trading Insights: A Closer Look at Duolingo

Trading Insights: A Closer Look at Duolingo

Nov 15, 2023

Hello everyone and welcome to our latest blog post in the series ‘What makes this trade great’. Today, we’re going to take a deep dive into the world of language learning apps, specifically, Duolingo.

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My Personal Connection with Duolingo

Now, let me be upfront about this, I do have a personal bias towards Duolingo. In fact, it’s a bit of a bittersweet moment for me. On the personal front, I’m currently learning Spanish through Duolingo and I must confess, I’m genuinely fascinated by its teaching methods. It’s an enjoyable, interactive, and engaging way to learn new languages and I highly recommend it.

But as a trader, I must put aside my personal preferences and look at the hard facts. When it comes to money, emotion has to take a back seat. Thus, I find myself asking and answering the tough question here: does the financial reality of Duolingo make it a good trading prospect?

What Happened with Duolingo?

Just a few weeks ago, Google announced its plan to launch its own language learning module (insert link), which was not great news for Duolingo. In the immediate aftermath of this news, Duolingo indeed had a couple of rough trading days. But surprisingly, it managed to completely recover from the dip, even topping its previous highs soon after. A more recent earnings report also had a positive effect on the stock.

Despite this, my trader’s intuition pushed me toward an opportunity of shorting this stock. I saw an opening when the stock’s low hovered around the 212 mark and I kept an eye out for any dips below that. It took a patience-testing two hours of close monitoring, but the stock finally did break down through the 210 mark. Spotting this, I went ahead and shorted the stock at around 200.85. Since then, it’s been smoothly sailing downwards.

The Future of the Duolingo Stock

This doesn’t necessarily mean the end for Duolingo’s stock. In fact, there are signs of a potential rebound in the future. The next low, looking left, is 200.24 but I’m not suggesting it will dip to that level. But if it holds at the 200 mark, it could create an ideal opportunity for going long.

“A trader must always be ready to switch gears when the market conditions demand it.”

Closing thoughts

Duolingo remains, in my personal opinion, a fantastic platform for language learning (with a convenient free version available). I’ve gained a lot from it while learning Spanish. Yet, as a trader, the market dictates my moves more than my personal opinions.

So, that’s the story of Duolingo from my trading lens. For now, it needs to be watched closely for signs of a reversal. As traders, we consider both the highs and lows as potential money-making opportunities. That’s the beauty of trading!

On that note, let’s get back to the trading room. If you found this post useful, do keep reading our other insights and case studies on various trades! Have a fantastic day, and as always, happy trading!